The International Monetary Fund (IMF) has approved a waiver of the Federal Excise Duty (FED) on Pakistan International Airlines (PIA) international tickets, paving the way for significant fare reductions.
According to sources in the Privatization Commission (PC), the waiver was granted at the request of the Pakistani government and could result in substantial savings for travellers.
Passengers flying to the USA might save up to Rs350,000, while those traveling to Africa and the Middle East could see ticket prices drop by up to Rs105,000. Similarly, flights to Europe, Australia, New Zealand, and the Far East may offer savings of up to Rs210,000.
However, the FED waiver applies exclusively to international flights, with domestic air travel still subject to the duty, as confirmed by PC officials.
The 2024 federal budget had previously imposed an additional Rs56 billion in FED on air travel, which this move partially alleviates.
In addition to the FED waiver, the IMF has also approved an 18% sales tax exemption for the purchase or lease of new aircraft.
Furthermore, to bolster PIA’s financial health, the IMF has agreed to transfer Rs46 billion in negative equity from the airline to a holding company. This adjustment is expected to lower operational costs and enhance the airline’s appeal to potential investors.
The government remains committed to privatizing PIA and is revising regulations to enable bidders to vie for a 60% stake in the airline, PC officials added. These measures aim to stabilize PIA and attract interest from the private sector, ensuring its long-term sustainability.
